Title Issues with Foreclosed Properties
Title issues with foreclosed properties often arise when a dispute comes up over a property’s lawful ownership. Most often, these involve a claim that the underlining foreclosure was not performed lawfully. Massachusetts law is clear that the failure to “strictly comply” with the applicable foreclosure requirements makes a foreclosure void.
As someone who has worked on foreclosure issues both for borrowers and third-party buyers of these properties, I’ve seen these problems from both sides.
Several options exist for resolving title issues with foreclosed properties.
Release from the Prior Property Owner
One of the easiest ways to resolve a faulty foreclosure problem is to get a release from the proper property owner.
If the underlining foreclosure is void, the prior owner still has ownership of the property. Often, if they are willing to deed this ownership to the new owner, any issues with the void foreclosure issue can be resolved.
This, of course, requires the consent of the prior owner (and the ability to locate him or her).
If the prior owner cannot be located or is unwilling to resolve a void foreclosure, court action may exist to fix the problem. An action for quiet title or a declaratory judgment may be effective for one of these matters under the right circumstances.
New Foreclosure Sale
In neither option above is a possibility, a new foreclosure sale can occur.
Such a sale does not necessarily need to be performed by the original lender or mortgagee. In certain circumstances, a third-party buyer of a foreclosed property can assume the mortgage and promissory note and do a new foreclosure sale themselves.
Needless to say, anytime a problem arises in the foreclosure process, you should speak to an experienced attorney immediately. If you need help with such a matter, contact me for a consultation.